Tuesday, March 31, 2009

Performance Measurement: Everybody can be a winner.

There have been a few moments at Booth in which I realized I was not just in the minority on a particular issue, but perhaps completely alone. Two such instances occurred in Taxes (on corporate tax "evasion" and the estate tax) and one instance occurred in my "HR" class with regard to performance evaluation.

One of the reasons I chose my second undergraduate institution was because of its very unusual grading policy. We received regular grades so when we applied to PhD programs (as most did) we had a transcript to show for our work but we never received a report card. If you wanted to know your grades you had a make a special trip to the registrar. And I never made that trip.

And I loved it. At my first college I was living for the grade. I was absolutely miserable. Grades motivated me but in an unbearable way. Rather than learning for myself, I was simply trying to please my professors. Relieved of grades, my performance became dramatically better.

So the quarterly report card at Booth was jarring. And being graded on a curve was even worse. I understand the role of the curve at a large institution. (Much easier to grade 120-180 students by.) And I get the rationale for relative performance measurement. (Constrains grade inflation ... and perhaps egos.) Being aware of the average and striving to excel beyond that is certainly not a bad thing. But I challenge you to determine from a discussion with 25 randomly selected Booth students which one's are the A students and which are the C students. (In other words, how often to grades tell us anything useful in a group that is above average as a whole?) So I was surprised to realize in my HR class that this sort of grading scheme was standard at many corporations for the purpose of performance evaluation. And I was completely alone, so it seemed, in my assertion that in an organization, especially of high performing individuals, that this seemed ludicrous and counterproductive.

If you have a group of hard-working people who all did a damn good job, what's the matter with splitting the pie and calling it a day? Why do we need to focus on nearly imperceptible differences in order define our hierarchy? And if the higher ups are too chicken to identify and address very perceptible differences, creating the risk that slackers will receive just as much reward as hard workers, then that's a completely different problem. You need to hire some better managers. And if you are continually hiring under achieving employees, then improve your hiring practices.

This has bigger implications than collegiality at work, or lack thereof. And I don't think this is just applicable to organizations of exceptional achievers. How is living for the grade all that different from living to beat quarterly earnings expectations? How is grading on a curve all that different from judging employees solely by whether they managed to beat the next guy, even if that means a fantastic decline in business practices (such as lending standards)? I don't see how long-term excellence or truly innovative, independent thinking (that firms allegedly desire) can ever come from the short-term perspective that is created by relying on quick and easy grades and relative performance standards. And I don't see how rubbing employees' noses in temporary setbacks or down periods, in order to fill your X% under achiever quota, does the organization any good. And if this measurement scheme is the only way to get results in your organization then perhaps you're hiring the wrong people.

I believe that it is more important to be absolutely good than relatively good. I believe that boiling one's life efforts into a tidy score sheet is unenlightening. I believe that life is not a sum zero game: my "win" does not necessarily require your "loss". And I believe that surrounding myself with people who excel for themselves, not for someone else's approval, will make me not just happier but ultimately more successful.

[The title of this post comes from my puzzlement at the backlash to the "everybody's a winner" self-esteem movement, for lack of a better term, for kids. But that's another story.]


OMGparishilton said...

I believe that life is not a sum zero game

Katie said...

I totally agree, especially the part about it being an issue with management if they're unable to execute basic performance management duties without grading on a "curve". Great, well-written post.

Anonymous said...

Well said.